NAC to dispatch first Installment to purchase Wide Body aircraft by next week

MAY 19, 2017-KATHMANDU

Spokesperson of NAC Mr. Rabindra Shrestha said that Nepal Airlines corporations has all set to dispatch the first installment of the payment to AAR Corporation by next week. NAC is going to send 35 percent (around Rs eight billion out of the total cost of around Rs 22 billion) to the supplier as the first installment.

NAC has targeted May 26 for the first installment of purchase of two A330s. The officials also noted that the first installment has delayed due to prolonged loan negotiation with Employees Provident Fund (EPF) and Citizen Investment Trust (CIT).

The Cabinet has already decided to extend government guarantee for NAC to obtain loan. The NAC board, chaired by secretary at Ministry of Culture, Tourism and Civil Aviation, had selected agent company AAR Corp as it had quoted lowest price to supply the aircraft. NAC, in its tender document, had sought second-hand aircraft that has been flown for only up to 1,000 hours, but AAR Corp had proposed to supply new aircraft at $104.8 million each.

NAC has already sent $1 million to AAR Corp as commitment fee for the aircraft. As per the bonding treaty signed on Friday, NAC will pay for the aircraft in two installments. The first tranche will be around Rs 8 billion and next one is Rs 14 billion, according to NAC.

As per the AAR Corp notice, they have planned to deliver first aircraft by September 2017 and second by March 2018, but the lengthy procedure in signing the agreement and sending first installment may result delay in delivery.
“NAC can’t fly their jets to European destinations, as all Nepali carriers have again been banned by the European Commission for significant safety concerns.”

Apart from the EU blacklist, it’s almost certain that the regulatory authority Civil Aviation Authority of Nepal (CAAN) will not be able to thoroughly oversee the air carriers due to lack of capability, as clearly pointed by the International Civil Aviation Organization (ICAO).